Mobile Fidelity Lawsuit Update

For those of you wanting to know a little more about the legal go’ins on, here is some additional information.

The current class action law suit against Mobile Fidelity Sound Lab, Inc. (Mobile Fidelity or MoFi) was filed in the UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS on or about August 18th 2022 and was taken out by Adam Stiles a vinyl record fan who lives in North Carolina.

The suit § 1:22-CV-04405 alleges that Mo-Fi engaged in a variety of deceptive practices by misrepresenting certain series of recordings as pure analog productions. The suit seems to make clear that not all MoFi products are pure analog and that certain records carrying the “Mobile Fidelity Sound Lab” banner are understood to use DSD technology in their production. However, others with banners such as “Original Master Recording” and “Ultradisc One-Step Process” were presented as all analog productions.

In fact the Mo-Fi web site as of 9/20/22 states that, quote:

“The GAIN 2 Ultra Analog™ system is comprised of a Studer™ tape machine with customized reproduction electronics* and handcrafted cutting amps that drive an Neumann SX74 cutting head on a restored Neumann VMS-70 lathe.

First and foremost, we only utilize first generation original master recordings as source material for our releases.”

Mo-fi, even sent out e-mails back as recent as 9th October 2020, stating; “there is no analog to digital conversion in our vinyl cutting process. Any product that bears the ORIGINAL MASTER RECORDING stripe on the jacket lets the customer know that the Original Master Tape was used to produce the release.” and “We do not use digital sources except in the cases where the title’s original master was digital itself”.

It would appear that the above statements were correct until about 2011. However, after that year Mo-Fi changed its process to begin incorporating DSD mastering in its production process. According to the lawsuit: “By the end of 2011, 60% of vinyl releases incorporated DSD, and MoFi’s last non-DSD recording was in 2020.”

Mo-Fi, either deliberately or by error of omission, didn’t inform its customers of this change in the production process until it was released during an interview with Mo-Fi engineers in July 2022. After which Mo-Fi updated all its marketing materials.

Possible Financial Impact

According to the complaint the lawsuit seeks restitution for:

“(i) breach of express warranty; (ii) breach of implied warranty; (iii) violation of the Magnuson-Moss Warranty Act…; (iv) fraud; (v) unjust enrichment; (vi) violation of the North Carolina Unfair and Deceptive Trade Practices Act…; and (vii) violation of state consumer fraud acts.”

So just how much is this going to set Mo-Fi back financially? According to the “Prayer for Relief,” the plaintiff seeks an order from the judge for:

“…compensatory and punitive damages in amounts to be determined by the Court and/or jury…” and “An award of statutory penalties to the extent available…” and “…pre-judgment interest on all amounts awarded…” and “…restitution and all other forms of monetary relief…” and “…awarding Plaintiff and the Classes their reasonable attorney’ fees and expenses and costs of suit.”

This requested order could be costly as according to the “Jurisdiction and Venue” section of the lawsuit it says:

“This Court has subject matter jurisdiction pursuant to 28 U.S.C § 1332(d)(2)(a) because this case is a class action where the aggregate claims of all members of the proposed class are in excess of $5,000,000.00, exclusive of interest and costs, there are approximately 5,000 members of the putative class, and Plaintiff, as well as most members of the proposed Class, are citizens of states different from Defendant.”

So there is a possibility of a judgment of $5,000,000.00 or even more, which is clearly a lot of money. According to the Washington Post article, MoFi, owner of Music Direct brings in revenues of “more than $40 million a year” and Mobile Fidelity “earned about $9 million last year.” – Remember these are revenues not profits.

Clearly a potential judgment of $5 million or more  is not “chump” change for any small company and I am sure that there will be a lot of legal wrangling going on between now and the judgment.

Let’s all hope that Mobile Fidelity, while getting its “hands slapped”, isn’t pushed into declaring bankruptcy or NOBODY wins and every vinyl audiophile will loose…… A LOT.

Here is a link to the court filing document at ClassAction.org.

For more background information read these posts:

• Mo-Fi Sued For Using “Digital” In All Analog Recordings
• Jim Davis Clarifies The Mo-Fi Mastering Process
• Mobile Fidelity Mastering Process Statement